What was once a niche has now become mainstream. Ever since “green” products arose in the 1970s, they’ve been dismissed by grocery executives as too expensive or low quality to interest most buyers. But a new report from The Boston Consulting Group, When Social Responsibility Leads to Growth: An Imperative for Consumer Companies to Go Green, suggests it’s time for a reevaluation.
“Responsible consumption” (RC) products now account for at least 15% of all grocery sales—or a $400bn global market. Three-quarters of consumers in the most developed countries say they buy RC products at least occasionally. In the otherwise stagnant grocery sector, two-thirds of total growth in recent years has come from RC products. Even with a price premium that remains higher than conventional offerings, sales of RC products are growing because quality has improved and concerns about chemicals have increased. The report lays out the most RC-product claims now available—labels that address organic, natural, social, and fair-trade criteria. Even long-established claims, such as organic, continue to expand into new product categories and drive substantial growth.
Most of this growth, however, has gone to RC specialty brands such as Seventh Generation and retailer private labels such as Carrefour Bio. For major consumer brands—referred to in the report as A brands—growth of products making organic or natural claims was just 1.3%, compared with 4.3% for private label and 12.5% for specialty. The research suggests that many A brands have either ignored the trend or offered unconvincing product extensions that have failed to win consumer trust.
A brand manufacturers can succeed with RC products, but they need outside certification of their claims if they’re going to convince wary consumers. They can do that with a new brand, as Clorox did with Green Works, or by acquiring an existing specialty brand, as Unilever did with Ben & Jerry’s. But the bottom line for A brands is that they need to take a different approach to win in the responsible sector.